There's been a lot of hand-wringing by the WSJ and Thomson Reuters News over big attorney fee awards in recent shareholder class actions.  See “Foretelling the End of Money-for-Nothing Class Actions,” and “Dealpolitik: Delaware Supreme Court Should Revisit $304M Legal Fee.”  These news stories cherry-pick a handful of class actions from across the country that have resulted in large fee awards for winning plaintiffs’ lawyers.  To the untrained eye, these multi-million dollar fee awards seem jaw-dropping, but if you drill down in each particular case, the criticism is unwarranted.

Criticism over these big fee awards fluctuates between the work and the results of winning plaintiffs’ counsel.  When winning plaintiffs’ lawyers obtain favorable non-monetary judgments, they criticize the results, not the work.  When winning plaintiffs’ lawyers obtain big monetary judgments, they criticize the work, not the results.  The reality is, these relatively "big" fee awards are determined by a whole range of factors, which include, among other things, the work AND the results.

Criticism of Moody's $4.5 million fee award focused on the lack of monetary judgment and all-but-ignored the over 28,000 hours of work by plaintiffs' counsel.  Not all class actions are about obtaining cash judgments.  You can’t always calculate the economic dollar value of public benefits that extent well beyond class members.  In these types of class actions, plaintiffs’ counsel act as private attorneys general for important public interest matters.  Winning plaintiffs' lawyers in these cases shouldn't be penalized by not being fairly compensated.  In fact, there's empirical research that class counsel don't make enough money in these cases.  See: "Do Class Action Lawyers Make Too Little?"

Criticism of Southern Copper's $305 million fee award focused on the  plaintiffs' counsel work of $35,000 per hour and all-but-ignored the $2 billion judgment obtained for class members.  When winning plaintiffs’ counsel obtains large settlements in class actions, they ought not be penalized for working efficiently.  When class actions drag on year after year, it is often the result of a high-priced, work-churning defense.  Just because large settlements can happen quickly, doesn’t mean winning plaintiffs’ counsel should be penalized by not being fully compensated.

“Whether big or small, attorney fee awards are determined by a range of factors,” said Terry Jesse, Executive Director of NALFA.  "Work and results are but just two factors we've considered here.  But judges and qualified attorney fee experts look at the other range of factors and they are in the best position to judge these fee awards because they do the in-depth forensic analysis that’s required in underlying cases,” Jesse said.